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Written by: Commentary Editing Room
2021-04-13 07:00
Last update date: 2021-04-13 07:00
The Chief Executive Officer of the Hong Kong Housing Society, Chen Qinmian, recently accepted a media interview and pointed out that the Housing Society's financial situation is stable, but there will be financial pressures four to five years later.
Although the Housing Association is a self-financing statutory organization, many projects are in cooperation with the government or entrusted by the government. Therefore, the government may consider taking the lead in increasing the financial commitment of the Housing Association so that the Association can focus on improving local housing instead of spending manpower time. Calculate finances and try to balance expenditures from rent, property prices, and investment income.
Chen Qinmian said that the Housing Association will have 14 development projects in the next ten years, involving about 20,000 units. Therefore, it is expected that there will be huge funding needs in the next few years. Among them, the reconstruction of Minghua Building and other projects will not be completed until 2034. The 2020 annual report shows that the cost of planned and implemented projects has reached 48 billion yuan, which exceeds the total net asset value of the current organization.
Last year, the Housing Association recorded its first operating loss in nearly a decade, with a deficit of 1.03 billion yuan.
Chen Qinmian said that the Housing Association currently has a lot of work on hand, which is like "breaking records" for him.
(Photo by Gong Jiasheng)
Investment income is difficult to last
It is generally believed that the main income of the Housing Association comes from its residential and commercial rentals, property prices, and management expenses. In addition, the Housing Association can only pay a nominal land price of 1,000 yuan for the development of subsidized rental housing estates, and only pay the market land price for the residential part of subsidized-sale houses. One-third, it is easy to make people think that the land price reduction or exemption can greatly reduce the expenditure of the Housing Association.
However, for the past ten years, the Housing Association has actually relied on external investment income to support its finances. For example, from 2017 to 2018, the Housing Association did not sell any new subsidized units, and investment income accounted for approximately 66% of its total income.
Obviously, the excessive return on investment will inevitably lead to the financial situation of the institution being subject to the external market environment.
Although the Housing Association has revealed that its investment direction has become more conservative in recent years, related behaviors can never be risk-free. For example, the Housing Association lost 887 million yuan in investment during 2019 to 2020 under the epidemic, which is more than the 143 million loss in the business category. High, accounting for 80% of the total annual loss.
In the future, there will be more and more variables in the world economy, and it is difficult to guarantee that the investment performance of the Housing Association will maintain its past good results.
(Photo of Housing Association)
The government must unravel the self-financing curse
In order to relieve financial pressure, Chen Qinmian pointed out that the Housing Association may need loans or financing in the future, but these methods are not the best way in the long run.
Whether it is financing loans or financing, it will inevitably take a considerable amount of time, such as bargaining with banks or other financial institutions.
In particular, the Housing Cooperation is the largest source of subsidized units in Hong Kong other than the Housing Authority. Its smooth operation has irreplaceable value in solving local housing problems.
Regardless of how the Housing Association manages its families and takes precautions, it is still limited by self-financing, financial autonomy, and independent operation. It may not be able to implement the belief in providing multiple housing options and improving the local living environment to the fullest extent.
As long as the organization fails to get rid of these curses for a day, its members will need to worry about their own financial status, and thus will not be able to devote all their efforts and resources to improving local housing.
For example, in recent years, it is precisely because of the tight financial situation that the Housing Society needs to maintain a substantial proportion of subsidized sale flats.
If the self-financing curse is lifted, the housing association can provide units in the future to increase the number of rental units more needed by the grassroots.
In addition, we used to advocate for the Housing Association to rebuild Class B housing estates commonly known as "middle-class public housing" to reduce the housing expenses of middle-class households. If the government can directly allocate funds, I believe it will not be difficult.
There are three "middle class public housing" in Hong Kong. The gem building of the "middle class public housing" in Tsuen Wan was named after "Stone" because it was adjacent to Shek Pik New Village.
(Photo of Housing Association)
This time the Housing Association’s fiscal deficit alert is sufficient to remind us that if organizations dealing with local housing problems are struggling to be self-financing, it will only hinder them from fulfilling their mission.
In view of this, the government behind these organizations should study how to take the lead in increasing their financial commitments, and fully support housing construction organizations such as the Housing Association and the Housing Authority, so that they can focus on improving the quality of their housing construction and ensure that the project will not overspend and delay. And satisfy the residents.
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